Richard Cordray: "The marketplace is hostile to those in poverty."

These comments were excerpted from a speech given by Richard Cordray, Director of the Consumer Financial Protection Bureau, at the 2012 Assets Learning Conference, a biannual gathering on asset-building hosted by CFED (Corporation for Enterprise Development) in Washington D.C.

The recent financial crisis and the deep recession that’s followed in its wake delivered a devastating blow to American households.  In recent years we’ve seen household wealth shrink by trillions of dollars and incomes decline.  As we continue to dig out from the crisis, the Census Bureau found that 46 million Americans were living in poverty in 2011.  While these numbers are striking, they do not convey the larger toll on people of low and moderate income.

It is especially expensive to be poor.  Time is money and when the compensation for your time is meager, you can work long hours and still produce insufficient income.  At the same time, the marketplace is hostile to those in poverty, who often pay higher prices for consumer goods, including financial products and services.  These factors put disproportionate burdens on people’s lives.

All day long, they encounter dignity issues that loom large as businesses show disrespect for their time and noticeably less enthusiasm than they muster for those more fortunate.  The emotional cost of these experiences is not knowable, but it’s inevitably accompanied by mounting feelings of frustration, helplessness, and marginalization.  The doctrines of equality that mark our aspirations in political life in America can ring quite hollow in the economic realm.

Our country is founded on the principle of equal opportunity.  That each of us has inalienable rights to life, liberty, and the pursuit of happiness.  We have long been nurtured by the promise of upward mobility and we’re deeply committed to the notion that our society has done away with any formal class or caste system.  So we like to suppose that any person, regardless of where he or she begins life, has some hope for climbing the economic ladder.  As Horatio Alger put it, “With some luck and pluck, we can all dedicate ourselves to strive and succeed.”  But in the nonfiction world, for too many people the concept of amassing the necessary savings to create upward mobility is more of a tantalizing taunt than a tangible prospect.

Some 43 percent of households nationwide and 65 percent of households of color have little or no savings to fall back on in case of a financial emergency.  For economically vulnerable consumers, even with meticulous budgeting, the task of saving money remains an enormous challenge.  In the wake of the recent financial crisis, the upward climb has become even steeper.  The stakes are higher when every dollar counts.  When even just a single unexpected fee and expense can upset the careful balance of your finances, life is exceedingly fragile.  Enmeshed in this vicious cycle, people can feel the pressure chipping away steadily at their morale and their resolve. […]

We recognize that consumers have to climb the economic ladder on their own.  We cannot step into their shoes and do that for them.  Individual responsibility, no matter how difficult it may be in different circumstances, remains at the core of American economic life.  But what we can do is hold the ladder steady for people. […] [The Consumer Financial Protection Bureau] is doing its best to reposition the ladder of opportunity so that it will not fall over again in our lifetimes.  We’re working to make the mortgage market, and other consumer financial markets, more fair, transparent and accountable.  We’re also focused on addressing practices that are unfair, deceptive, abusive, or discriminatory towards consumers.

When we discuss the toll of poverty, we must recognize that one of the greatest assaults upon individual dignity is posed by discrimination.  The objects of discrimination are victimized by impersonal stereotyping.  Whatever your personal qualities, your character, your determination, your effort, discrimination forcibly diminishes your opportunities based on characteristics you do not control and that do not truly define the actual person that you are.

That’s why it’s so important that federal law prohibits lending discrimination based on characteristics such as race or gender or even ones status as a recipient of government assistance.  We’ve seen in recent years how discrimination deprives people of access to responsible credit and harms entire communities.  When someone is unlawfully denied a loan to go to school, buy a home, or start a small business, growth is stunted more broadly and the inequality gap yawns even wider.  The evil of discrimination can price out or cut off whole segments of the population from accessing consumer credit. […]

In order for consumers to be able to climb the economic ladder, they need to be able to avoid stumbling over the trips and traps that can lead them drop back a rung or slip off the ladder entirely.  Not only is the Bureau working to ensure that financial products are not designed or marketed in ways that hurt consumers, but we want to put people in position to make good choices for themselves – choices that change their lives and empower them to succeed.  All of this work aims at helping steady the ladder people seek to climb towards a better life for themselves and those they care about.  Every one of us deserves the chance to climb that economic ladder; we also deserve to be treated with dignity and respect, without regard to which rung on that ladder we may have attained.


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